Correlation Between Barings Emerging and Harbor Strategic

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Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Harbor Strategic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Barings Emerging and Harbor Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Emerging Markets and Harbor Strategic Growth, you can compare the effects of market volatilities on Barings Emerging and Harbor Strategic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Barings Emerging with a short position of Harbor Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Harbor Strategic.

Diversification Opportunities for Barings Emerging and Harbor Strategic

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Barings and Harbor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Harbor Strategic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Strategic Growth and Barings Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Barings Emerging Markets are associated (or correlated) with Harbor Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Strategic Growth has no effect on the direction of Barings Emerging i.e., Barings Emerging and Harbor Strategic go up and down completely randomly.

Pair Corralation between Barings Emerging and Harbor Strategic

Assuming the 90 days horizon Barings Emerging is expected to generate 3.4 times less return on investment than Harbor Strategic. But when comparing it to its historical volatility, Barings Emerging Markets is 2.2 times less risky than Harbor Strategic. It trades about 0.06 of its potential returns per unit of risk. Harbor Strategic Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,398  in Harbor Strategic Growth on September 3, 2024 and sell it today you would earn a total of  98.00  from holding Harbor Strategic Growth or generate 4.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Barings Emerging Markets  vs.  Harbor Strategic Growth

 Performance 
       Timeline  
Barings Emerging Markets 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Barings Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Harbor Strategic Growth 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Strategic Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Harbor Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barings Emerging and Harbor Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barings Emerging and Harbor Strategic

The main advantage of trading using opposite Barings Emerging and Harbor Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Harbor Strategic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Harbor Strategic will offset losses from the drop in Harbor Strategic's long position.
The idea behind Barings Emerging Markets and Harbor Strategic Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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